Valuation Metrics Reflect Enhanced Price Appeal
Raunaq International currently trades at a P/E ratio of 6.92, a figure that stands out as significantly lower than many of its industry peers. For context, competitors such as Jindal Photo and Arfin India command P/E ratios of 9.44 and 177.59 respectively, underscoring Raunaq’s comparatively modest earnings multiple. This low P/E ratio suggests that the market is pricing the stock conservatively, potentially undervaluing its earnings power.
Complementing this, the company’s price-to-book value ratio is 1.83, which is reasonable given the sector’s capital-intensive nature. While not the lowest in the peer group, it remains well below levels seen in more expensive peers, such as Signpost India at 28.95, indicating that Raunaq’s stock price is not excessively premium relative to its net asset base.
Enterprise value (EV) multiples also provide insight into valuation. Raunaq’s EV to EBIT and EV to EBITDA ratios both stand at 18.28, which, while higher than some peers like Control Print (EV/EBITDA 11.27), remain far below the extreme valuations of Arfin India (EV/EBITDA 40.99). This middle-ground positioning suggests a balanced valuation reflecting both growth prospects and operational risks.
Financial Performance and Returns
Raunaq’s return on capital employed (ROCE) is 8.15%, a modest figure that indicates moderate efficiency in generating profits from its capital base. However, its return on equity (ROE) is notably higher at 26.46%, signalling strong profitability relative to shareholder equity. This disparity may reflect effective leverage or capital structure optimisation, which investors should monitor closely.
Despite these positive profitability metrics, the company’s recent market performance has been mixed. Over the past month, Raunaq’s stock price declined by 4.17%, underperforming the Sensex’s 2.84% drop. Year-to-date, the stock has fallen 8.62%, compared to a 3.46% decline in the benchmark index. However, over longer horizons, Raunaq has delivered impressive returns, with a three-year gain of 137.43% and a five-year return of 146.48%, substantially outperforming the Sensex’s respective 38.27% and 77.74% gains.
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Comparative Valuation: Raunaq vs Peers
When benchmarked against its construction sector peers, Raunaq International’s valuation stands out as very attractive. MarketsMOJO’s valuation grading places Raunaq in the “very attractive” category, contrasting sharply with several peers rated as “very expensive” or “risky.” For instance, Max Estates is classified as risky due to loss-making status, while Jindal Photo and Arfin India are tagged very expensive with P/E ratios of 9.44 and 177.59 respectively.
Other peers such as Control Print and SRM Contractors are rated “very attractive” and “attractive” respectively, but their valuation multiples remain higher than Raunaq’s. Control Print’s P/E ratio is 10.6, and SRM Contractors’ is 14.18, both well above Raunaq’s 6.92. This relative undervaluation could indicate that Raunaq is either overlooked or facing sector-specific headwinds that have yet to be fully priced in by the market.
Market Capitalisation and Mojo Score Insights
Raunaq International’s market capitalisation grade is 4, reflecting a mid-tier market cap within its sector. However, its overall Mojo Score has deteriorated to 37.0, resulting in a downgrade from Hold to Sell as of 17 Dec 2025. This downgrade signals caution from the rating agency, likely due to concerns over near-term earnings visibility or sectoral challenges.
The downgrade contrasts with the improved valuation grade, suggesting that while the stock is cheaper on a relative basis, underlying risks remain. Investors should weigh this dichotomy carefully, balancing the appeal of low multiples against the potential for operational or macroeconomic headwinds.
Price Movement and Trading Range
Raunaq’s current share price stands at ₹51.76, down 4.99% on the day, with a previous close of ₹54.48. The stock has traded within a 52-week range of ₹48.64 to ₹98.80, indicating significant volatility over the past year. The recent price contraction has brought the stock closer to its annual lows, which may enhance its appeal to value investors seeking entry points in beaten-down construction stocks.
However, the sharp decline also reflects broader market pressures and sector-specific challenges, including fluctuating raw material costs and project execution risks. These factors contribute to the cautious stance reflected in the Mojo Grade downgrade.
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Long-Term Performance and Investor Considerations
Despite recent volatility, Raunaq International’s long-term returns have been robust. Over a three-year period, the stock has delivered a remarkable 137.43% return, nearly quadrupling the Sensex’s 38.27% gain. Over five years, the outperformance is even more pronounced, with Raunaq returning 146.48% compared to the Sensex’s 77.74%. This track record highlights the company’s potential to generate substantial shareholder value over time.
However, the 10-year return paints a different picture, with Raunaq showing a negative 53.29% return against the Sensex’s strong 230.79% growth. This divergence suggests that the company has faced significant challenges in the past decade, which investors should factor into their risk assessment.
Given the current valuation attractiveness and mixed rating signals, investors should conduct thorough due diligence, considering both the company’s operational fundamentals and broader sector dynamics before committing capital.
Conclusion: Valuation Opportunity Amidst Caution
Raunaq International Ltd’s recent shift to a very attractive valuation grade, driven by low P/E and P/BV ratios, presents a compelling case for value-oriented investors. The stock’s relative undervaluation compared to peers and its strong long-term returns underscore its potential as a turnaround candidate within the construction sector.
Nevertheless, the downgrade in Mojo Grade to Sell and the stock’s recent price weakness highlight ongoing risks. Investors should balance the opportunity presented by the valuation metrics against the company’s operational challenges and sector headwinds. A cautious, research-driven approach is advisable to capitalise on the potential upside while managing downside risks.
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